Shell’s third quarter 2009 earnings, on a current cost of supplies (CCS) basis, were $3 billion compared to $10.9 billion a year ago. Basic CCS earnings per share decreased by 72% versus the same quarter a year ago.
Cash flow from operating activities for the third quarter 2009 was $7.3 billion, and excluding net working capital movements, was $7.7 billion.
Net capital investment for the quarter was $7.4 billion. Total dividends paid to
shareholders during the third quarter 2009 were $2.7 billion.
The company has announced a third quarter 2009 dividend of $0.42 per share, an increase of 5% over the US dollar dividend per share for the same period in 2008.
Earnings in the third quarter 2009 reflected the following items, which in aggregate amounted to a net gain of $371 million
Upstream earnings included a net charge of $123 million, reflecting charges related to asset impairments and restructuring provisions. These were partly offset by gains related to tax credits, mark-to-market valuation of certain gas contracts and the estimated fair value accounting of commodity derivatives. Earnings for the third quarter 2008 included a net gain of $2,368 million.
Downstream earnings included a net gain of $536 million, reflecting gains related to the estimated fair value accounting of commodity derivatives and tax credits, which were partly offset by charges related to asset impairments and restructuring provisions. Earnings for the third quarter 2008 included a gain of $445 million.
Corporate and Minority interest earnings included a charge of $42 million, related to restructuring provisions and tax charges.
Third quarter Upstream earnings were $1,543 million compared to $8,647 million a year ago. Earnings included a net charge of $123 million related to identified items, compared to a net gain of $2,368 million in the third quarter 2008.
Upstream earnings compared to the third quarter 2008 reflected the impact of significantly lower oil and gas prices. These impacts were partially offset by increased gas sales volumes, including the effect of the successful start-up of the Sakhalin II project, and lower royalty and tax expenses compared to the third quarter 2008.
Third quarter 2009 oil prices increased from second quarter 2009 levels. However mainly due to contractual time lag effects the third quarter 2009 global natural gas realisations remained similar to second quarter 2009 levels. A generally weak environment for natural gas marketing and trading activities also affected the third quarter 2009 earnings.
Global liquids realisations were 43% lower than in the third quarter 2008. Global gas realisations were 42% lower than a year ago. In the Americas, gas realisations decreased by 64% whereas outside the Americas, gas realisations decreased by 29%. LNG realised prices compared to the third quarter 2008 decreased following trends in LNG price markers.
Third quarter 2009 production was 2,926 thousand boe/d compared to 2,931 thousand boe/d a year ago. Crude oil production was down 2% and natural gas production increased by 3% compared to the third quarter 2008.
Underlying production, compared to the third quarter 2008, increased by some 180 thousand boe/d from new field start-ups and the continuing ramp-up of fields over the last 12 months, more than offsetting field declines.
LNG sales volumes of 3.49 million tonnes were 13% higher than in the same quarter a year ago. Volumes reflected the ramp-up in sales volumes from the Sakhalin II LNG project and Train 5 at the North West Shelf project, which were partly offset by lower volumes from Nigeria LNG and reduced Asia Pacific LNG demand.
In Australia, Shell and its partners took Final Investment Decision (FID) for the Gorgon LNG project (Shell share 25%). Gorgon will supply global gas markets to at least 2050, with capacity of 15 million tonnes (100% basis) of Liquefied Natural Gas (LNG) per year and a major carbon capture and storage (CCS) scheme.
Shell has announced a Front-End Engineering and Design (FEED) study for a Floating Liquefied Natural Gas (FLNG) project, with the potential to deploy these facilities at the Prelude offshore gas discovery in Australia (Shell share 100%).
In the USA, Gulf of Mexico, Shell participated in an oil discovery at the Vito well (Shell share 55%), in sub-salt Miocene reservoirs. In offshore western Australia, Shell participated in the Achilles gas discovery (Shell share 25%). In the North America Haynesville and Groundbirch tight gas areas there is ongoing encouragement from exploration and appraisal well test results.
In Canada, the Government of Alberta and Government of Canada jointly announced their intent to contribute $0.8 billion of funding towards the Quest CCS project. Quest, which is at the feasibility study stage, could capture CO2 from the Athabasca Oil Sands Project at the Scotford Upgrader, for underground storage.
In Russia, the Sakhalin II project (Shell share 27.5%) achieved peak production of some 400 thousand barrels of oil equivalent per day (boe/d), and successfully ramped up production at the two LNG trains, ahead of schedule.
Shell continues with its strategy to refocus its Downstream footprint, and to make selective new investments in its larger, integrated refining sites and growth markets. Some 15% of Shell’s worldwide refining capacity, or some 600 thousand barrels per day, is earmarked for possible disposal or conversion to oil terminals.
In the Netherlands, Shell started construction this October of a new hydrodesulphurisation plant at the Pernis refinery to manufacture cleaner-burning oil products.
In Greece, Shell, as part of its strategy to concentrate its global Downstream portfolio, agreed to sell its activities for some $0.4 billion. The retail network will continue to operate under the Shell brand. This transaction is subject to regulatory approvals.
